Supplier Management Is More Critical Than Ever

Why are companies suddenly waking up to the importance of good supply-base management - and what's the real value of it, anyway? M. Bixby Cooper, associate professor of supply chain management at Michigan State University, draws on the metaphor of major-league baseball to explain.

It's only recently that a lot of companies have begun paying attention to their supplier bases, Cooper says. And they've paid a price for that lack of attention. With the lengthening of supply lines, the result of a greater reliance on offshore production, manufacturers are finding it tougher to ensure quality control and the timely delivery of product.

What's missing from company strategies, Cooper says, is a lack of understanding about the dynamic nature of supplier relationships. He cites the analogy of a major league baseball team, whose owners must look beyond the current roster of players in order to excel. The best franchises pay close attention to their minor-league affiliates as a constant source of new talent. "Really successful teams also have a scouting system," he says. "They don't wait for potential players to come to them."

Manufacturers, by the same token, should be continually assessing the pool of potential suppliers. They need to ensure the steady availability of backups for failing vendors, as well as create alternative sources of critical products or raw materials. Single-sourcing might yield the best price, but it's smart to have an existing relationship with a "B" supplier should your primary partner bow out for any reason. What's more, by having those options at hand, companies can keep the pressure on their existing suppliers to maintain quality at an acceptable price.

Cooper offers a number of tips for assessing supplier stability. He urges companies to conduct vendor audits and certification reviews on a regular basis. "We tend in those longer-term relationships to let things stagnate, and assume things are working well," he says. "And we find ourselves suddenly with a surprise."